Shanghai Pudong Development Bank, a mainland lender 3.78 per cent owned by Citi, plans to raise about US$1 billion from a share sale this year, a deal that will boost its capital to compete with expanding foreign banks. Bank chairman Jin Yun, at a shareholders meeting yesterday, said the Shanghai-listed bank had not yet decided whether to sell shares in the domestic or overseas market. Hong Kong and Frankfurt were among the overseas markets under consideration, Mr Jin said. Sources had indicated that the bank would launch a second listing in Hong Kong. Mainland banks are hoping to use initial public offerings as a means to strengthen their capital for expansion after the full opening of the sector to foreign rivals. Citi, HSBC and Standard Chartered are among the foreign banks that have been granted approval to run yuan-denominated services such as credit cards and wealth management. Pudong Bank's share sale may further dilute Citi's stake in the mainland lender but the US bank has an agreement to raise its stake to 19.9 per cent. That is the maximum stake allowed for any single foreign investor in a mainland bank under the regulations. 'There's no time frame on when the stake will be raised and no discussions have begun on price,' a source said. Mr Jin said official talks had not begun on the matter. After buying the stake, Citi can nominate a vice-president and two members to the board. It cannot sell its stake before 2009, under the terms of the agreement. Citi originally bought a 5 per cent stake in the bank in 2003. That was diluted when Pudong Bank raised six billion yuan from a share sale in November last year. Work on Pudong Bank's share sale was suspended earlier this year because of an investigation into the city's pension fund scandal and progress was still on hold, sources said. The bank had hoped that work could restart after the appointment of new Shanghai party secretary Xi Jinping. 'It's still too early' to go back to work on the public share offering, a source said. The pension fund scandal led to the sacking and removal of Shanghai party secretary Chen Liangyu from the 24-member Politburo in September last year for his alleged involvement, followed by the dismissals of three other officials. Shanghai's top political officials and business leaders became the subject of a central government investigation over allegations that money from the city's pension fund was siphoned to individuals, companies and projects to which they had close personal ties. Pudong Bank acted as the custodian bank of the 10 billion yuan pension fund. Bank of Shanghai's planned initial public offering had also been delayed because of the scandal, sources said. Pudong Bank president Fu Jianhua, who took control in the middle of last year, had previously been the chairman of Bank of Shanghai.